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To: Crimson Ghost who wrote (8471)	2/23/2004 8:53:47 AM
From: russwinter	Respond to of 110194

Train wreck watch: Another big weekly move in: 2X4 lumber to 394.50, up 16.7% in just one month OSM board to 486, up 34.7% in just one month pork carcass to 65.03, up 22.7% in just one month

To: Crimson Ghost who wrote (8471)	2/23/2004 9:04:11 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Toyota Motor Corp., the Japanese auto maker, said the rise in steel prices since 2002 has raised its cost to produce a vehicle in North America on average by more than $100. Ding ding ding ding! We have a winner sports fans! A stunning winner! Vehicle prices rise $100 on a car since 2002 LMAO Now just how significant is that compared to labor costs? Mish

To: Crimson Ghost who wrote (8471)	2/23/2004 9:52:53 AM
From: mishedlo	Read Replies (2) \| Respond to of 110194

With the economic recovery still uneven, many steel users find they must absorb the costs because their customers refuse to accept higher prices. Economists say that, broadly speaking, rising steel prices alone won't derail budding economic growth. But they affect manufacturers still struggling to emerge from the sector's three-year slump. "I have a fixed cost with my customers. I can't pass costs onto them," he said, which means tighter margins for his 300-employee company. A group of steel consumers and producers is considering petitioning the federal government to limit exports of steel scrap, which is used as a raw material to make new steel products. Appliance maker Maytag Corp. said last month it expects to offset rising steel costs in part with savings from a new contract with unionized employees. General Motors Corp. has resisted paying the surcharges. "It's pretty clear from our end that we have agreements with these companies. When the agreements were signed, everybody knew what the price would be," said GM spokesman Tom Wickham. Toyota Motor Corp., the Japanese auto maker, said the rise in steel prices since 2002 has raised its cost to produce a vehicle in North America on average by more than $100. Many service centers, which buy steel from steelmakers and sell it to customers, aren't committing to one-year contracts because prices are rising too rapidly. "We are scrounging near and far, looking for steel," says Mr. Leutwiler, whose staff has to call more centers to locate the types of steel the company needs. He plans to tell his customers parts he builds will be repriced to reflect steel prices at delivery, instead of at the initial order. Mr. Leutwiler, who is chairman of the 1,200-member Precision Metalforming Association, said member companies managed to survive the recession, but "this sudden run-up in steel prices will be the last straw for many of them." Mr. Leutwiler said he already has cut back employment at one of his Chicago facilities, bringing the company's total employment to 420, down from 500 a year ago, partly because of price increases. Steel companies and service centers have "been real clear," he says. "They are saying: 'This is the price. Take it or leave it.' " So, Mr. Crawford has started asking customers to pay more money than the contracts specified, an idea that only a few government customers have been receptive to. On new bid proposals, he has disclaimers that prices are good for only seven days. Washington-based Danaher Corp. is feeling the crunch in its division that makes ratchets, wrenches and socket sets for the Sears Craftsman brand. Steven Babcock, who directs metal supplies for Danaher, said proposed surcharges would increase the company's steel costs on 50,000 tons by seven figures this year. He buys steel on long-term contracts and at this point is telling the steel-makers his company isn't paying surcharges. "We are resisting as best we can but I think a day of reckoning is coming," he said. His greatest concern is that his customers will begin outsourcing hand tools overseas. "We don't want to give Sears Craftsman a reason to take off their 'Made in the USA' label." ========================================================= So we have rising steel prices that add $100 to the price of a car for Toyota, GM refuses to pay surcharges, Maytag offsetting the cost to workers, Sears threatening to move tool making out of the US, Precision Metalworking cutting back on jobs, and in general companies bitching that prices can not be passed on, with smaller companies struggling not knowing what to do. If demand is so great, why is everyone struggling to pass on these costs? I suggest supply of finished goods is great and demand only exists at cheap prices and/or for those willing to absorb rising commodity costs. Mish

To: Crimson Ghost who wrote (8471)	2/23/2004 10:00:14 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

China may raise interest rates for first time in more than a decade Mon Feb 23, 2:27 AM ET BEIJING (AFP) - China may raise local-currency interest rates for the first time in more than a decade as all other attempts to curb growth in consumer prices and investment have failed, according to economists. Early signs of rising inflation may force China's policy makers to hike the deposit rate to make it more attractive to put money in the bank, resorting to a policy measure they have not tried their hand at since 1993. "I expect the deposit rate will increase this year," said Wang Zhao, an economist with the Development Research Center, a think tank affiliated with the Cabinet. "When exactly depends on how the whole economy is operating." China's economy expanded 9.1 percent last year, pulling much of Asia with it, and a decision to rein in growth could potentially have a devastating impact on the region. Japan, which saw economic growth reach a 13-year high in the last quarter of 2003, can thank booming exports to China for much of the newly-won momentum. But with consumer prices in China now rising at the fastest pace in nearly seven years, officials in Beijing may now try to do what neither SARS (news - web sites) nor the bird flu virus was capable of -- slowing down the Chinese growth engine. The problem is too much money being too easily available and central bank governor Zhou Xiaochuan has said the government will give top priority to the job of preventing inflation from spinning out of control. "The central bank will use various instruments to adjust credit growth," Zhou said according to the China Daily. Warning signs of an investment bubble have emerged in recent months in industries such as real estate, steel and cement, pushing growth in fixed asset investments last year to 26.7 percent. Efforts to tighten credit -- from raising commercial banks' reserve ratios to increasing down payment requirements for luxury housing -- have had little effect. The M2 money supply expanded by 18.1 percent in January from a year earlier, only marginally below the 19.3 percent observed in the same month of 2003. Therefore, it may make sense for China's monetary authorities to strike right at the core of the problem, by hiking interest rates from their current low level, economists have argued. Interest rates are now so modest that it makes little sense to save rather than to spend on consumption or investment. The benchmark one-year interest rate on deposits denominated in the yuan is currently 1.98 percent, which, combined with rising inflation, makes it a very unattractive option to put and keep money in the bank. "People are losing out when they save their money in banks because of low interest rates," Yuan Guangming, an economist with the Chinese Academy of Social Sciences, told the China Daily. Last year consumer prices rose 1.2 percent, meaning the real interest rate for one-year deposits was a mere 0.78 percent. If deposit rates do not change, real interest rates could soon be heading below zero. In both December and January, consumer prices rose 3.2 percent from a year earlier, marking the highest level since April 1997, and they could be about to rise even further. China reported Monday that producer prices were up 3.5 percent in January from a year earlier. This figure -- which shows prices of products as they leave the factory but before they enter the distribution system -- will eventually translate into higher prices for consumers, although with a time lag, economist said. Although the consensus seems to be for higher interest rates in the coming months, this is not a panacea for the Chinese government, analysts said, warning new policies will bring new problems. "If the government raises interest rates, more money will come into China, making monetary policies more difficult to handle," said Susan Qin, an economist with BNP Paribas Peregrine in Beijing.